Yahoo! and EMI Plot Thickens: Deals to Watch

NEW YORK ( TheStreet) -- With Citigroup's auction of EMI, the British music label it repossessed from Guy Hands' Terra Firma in February only a week away, buyout investor Ronald Perlman has reportedly joined in negotiations along with other music labels and private equity investors.

Other interested parties include industrial and media conglomerate Access Industries, as well as music industry giants Warner Music Group, Sony ( SNY), BMG Chrysalis and Universal Music.

The Financial Times reported Perelman's interest in the famed music label that Hands' Terra Firma bought in 2007 for $6.5 billion and lost under a burden of debt and revenue below projections. When Citigroup ( C) seized the music-label, which owns rights to The Beatles music and was founded in 1931, it wrote off the $4.3 billion in financing it provided Hands to make the acquisition. Up for auction by Citigroup are EMI's music label, which is expected to draw up to $1.5 billion and its music publishing arm, expected to raise as much as $2.5 billion.

The sale will be the largest music industry buyout since buyout veteran Len Blavatnik and his Access Industries bought Warner Music Group for $3.3 billion in May. Blavatnik is considered to be one of the bidders for EMI either in its entirety or for just its record label, called EMI Music.

Perelman, like the other bidders for Warner Music, are back at the deals table after losing out to Access Industries this spring. The fragmented nature of the sale of EMI in two parts, the familiarity of bidders with each other and the overlaps each has with EMI's music and publishing arms will make for a compelling final week of auctioneering.

Some bidders like BMG, a joint venture between private equity firm KKR ( KKR) and German media conglomerate Bertelsmann and Sony may look to buy just EMI's music publishing arm, while Universal Music Group, owned by French media conglomerate Vivendi, may buy just the recorded-music EMI Music.

Because of specific interests in the two part auction, Perelman and Blavatnik may look to partner in a bid with conglomerates like Vivendi. In May, Perelman bid with Sony in his failed Warner Music buyout attempt and may look for partners in an EMI bid.

Meanwhile, investors like Ron Burkle's Yucaipa, a recent investor in Amalgamated Bank are also reported to be interested in submitting a bid for EMI, while Platinum Equity and Apollo Global Management have lost interest.

On Friday, AllThingsD's Kara Swisher reported that Alibaba Chief Executive Jack Ma said he is "very interested in purchasing Yahoo! ( YHOO)." Yahoo!, a 40% owner of the largest business ecommerce website in China founded by Ma, has been looking at options including a sale of the company or merger with AOL ( AOL) after its struggles this year culminated in the firing of CEO Carol Bartz in September.

Yahoo! shares, which are down over 20% year to date rose as much as 5.5% to 13.90 in early trading.

At a Stanford University forum in Palo Alto California, Ma said "We are very interested in Yahoo. Our Alibaba group is important to Yahoo and Yahoo is important to us...All the serious buyers interested in Yahoo have talked to us."

Ma's comments highlight the importance of Yahoo!'s stake in Alibaba the online seller of business and consumer goods, which includes premier Chinese online retail brands alibaba.com, Taobao, Taobao Mall and Alipay, its payment processing division.

Last week, private equity investors DST Global and Silver Lake and a consortium of investors bought a $1.6 billion piece of Alibaba Group previously owned by company insiders. The deal gave Alibaba, which is the largest online business trading market in the world, a $32 billion valuation. It also valued Yahoo!'s Alibaba stake at nearly $14 billion, not far below its overall market value of $17.3 billion.

In a September letter to employees after the share sale was announced, Yahoo! Chief Executive Jerry Yang confirmed the company's board has hired Allen & Company to do a "strategic review to help the Company to a path of robust growth." The letter indicated the company may be considering a review of the company, code word for a sale or merger. Allen & Company is currently also working on the initial public offerings of Groupon and Zynga.

The largest U.S. website by viewers is reeling after its board voted to fire former Chief Executive Carol Bartz earlier this September and replace her with CFO Timothy Morse on an interim basis. The Sunnyvale, California based Company has been in talks with AOL Chief Executive Tim Armstrong about a potential merger. A merged Yahoo! and AOL would likely keep Armstrong on as CEO to run the combined company.

Yang's letter mentioned the Silver Late and DST Global investment in Alibaba, stating that, "Alibaba Group has just announced a liquidity event for its employees that reflects a continued appreciation in its value, and therefore of the value of our stake." Silver Lake has also reportedly been interested in buying Yahoo!

The news of Ma's interest in Yahoo! is a twist in a contentious year when he has fought with its leadership. Earlier in the year, Yahoo! management criticized Ma for spinning the company's payments arm, Alipay, without their approval. The split put one of Alibaba's most valuable assets of the reach of some investors like Yahoo!. All parties settled in July by agreeing that if Alipay were to do an IPO, it would transfer at least $2 billion and as much as $6 billion to the parent Alibaba.

Ma's statements show he will continue to be a large presence in the company's direction. Ma has a first right of refusal to buy back the company's 40% Alibaba stake if it were to sell itself. His statement on Friday shows that whether Yahoo considers a merger or outright sale, he will likely be involved in negotiations.

A new study by researchers at the Federal Reserve Bank of New York suggests that bondholders still don't believe the government would ever let the firms collapse into bankruptcy -- after a decade of efforts by regulators to convince them otherwise. But at least one analyst who tracks big Wall Street firms' bonds says there may be an even bigger problem: Investors, pressured by the need to generate income, simply don't care whether the banks are too big to fail -- one way or the other.

Goldman Sachs Group Co-President and former CFO Harvey Schwartz will retire April 20, the company said Monday in a press release. The announcement came just days after the Wall Street Journal reported that CEO Lloyd Blankfein is preparing to step down, possibly later this year.